Accounting Standards Boards Paper 4

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Accounting Standards Boards Paper University of Phoenix ACC 541—Accounting theory and Research Professor: Cecil B. Lucy Lien Bach October 26, 2010 Introduction Accounting was created thousand years ago. Many companies use accounting system to record, maintain and report, and analyze business financial transactions. Because managers and investors make their business decisions based on Financial Statement, information obtained from Financial Statement must be concise and reliable. Budgets and performance reports provide decision support, planning and control business operations; therefore, Financial Statements must be accurately to represent a true and fair view of companies. To evaluate results of information from Financial…show more content…
According to Geoffrey Whittington (2008), the standard setters could not achieve a solution to the inflation accounting problem that users and preparers of accounts could be accepted. Whittington also argued that the frameworks of both the IASB and the FASB gave emphasis to the usefulness of decisions to investors when the focus was on general financial reports (Whittington, 2008). A recent report shows that the International Financial Reporting Standards (IFRS) has called to replace the Generally Accepted Accounting Principles (GAAP) in the United States by 2014. This change will have a big impact on the United States public companies through the way they represent financial reports (Hail, Leuz, & Wysocki, 2009). The controversy between the United States GAAP and the IFRS are the fair value and the market value (Hail, Leuz, & Wysocki, 2009). If things persist, the Securities and Exchange Commission (SEC) and the FASB may come against the IASB. The SEC stated briefly that there are to be improvements about how the IASB be funded and governed. The board was also criticized for being inadequate. Dr. Yvonne Hinson stated that the two boards had a meeting in 2002 and came to an agreement known as the “Norwalk Agreement” that was also called a memorandum of understanding. The memorandum stated that the IASB and the FASB would work toward a common goal (Hinson, 2009). Through a convergence, the United States could adopt the IFRS; however, arguments pro and con this
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